The changes introduce VAT on advance payments for certain vehicles and Insurance Premium Tax on most new leases. Ministers say the reforms are intended to preserve access to mobility support for disabled people while reducing public spending.<\/p>\n\n\n\n
The Motability Scheme enables eligible disabled people to lease cars, scooters and powered wheelchairs using their enhanced mobility benefits. According to the Department for Work and Pensions (DWP<\/strong>), recipients will continue to receive their full enhanced mobility award of \u00a377.05 per week and remain eligible for the scheme under the new rules.<\/p>\n\n\n\n The reforms, which took effect on 1 July 2026, follow measures introduced after last year’s Autumn Budget and come after changes to the range of vehicles available through the scheme.<\/p>\n\n\n\n From 1 July, vehicles leased through the Motability Scheme that require an advance payment are now subject to 20 per cent<\/strong> VAT on that optional top-up amount. According to the DWP<\/a>, Insurance Premium Tax at the standard rate of 12 per cent also applies to most new Motability leases from the same date.<\/p>\n\n\n\n The department said the changes do not affect existing leases or eligibility for the scheme. It also confirmed that the reforms do not apply <\/strong>to Wheelchair Accessible Vehicles.<\/p>\n\n\n\n Work and Pensions Secretary Pat McFadden said the measures are intended to balance support for disabled people with value for taxpayers. According to the DWP, he said the reforms are driven by “fairness for the taxpayer, fairness for disabled people, and fairness for the country<\/em>“, while maintaining mobility and independence for eligible users.<\/p>\n\n\n\n The government also stated that vehicles requiring no advance payment remain available, allowing eligible customers to access a car using their benefit alone. The core Motability package<\/strong>, including insurance for up to three drivers, breakdown cover and vehicle maintenance, also remains unchanged.<\/p>\n\n\n\nNew Tax Rules Alter Costs for Some Motability Customers<\/strong><\/h2>\n\n\n\n